Our 2012 Prediction For Gold
Don't Buy Gold. Buy A Gold Mine!
In todays market enviroment, there is a lot of different ways to invest ones money. You can buy into funds of all sorts, stocks and bonds, realestate or commodities. There are thousands of ways out there to invest. Not all will give you a return on your investment. With uncertainty in world markets like we see in 2011 - 2012 there is probably more ways to loose money that make money.
As the editor of www.juniorminers.com, I have followed the junior mining market for almost 20 years. Over that time I have seen fortunes made and fortunes lost. Today with most junior mining or even mid cap mining stocks plundered to 52 week lows and heading lower it would seem like a good time to buy. Then again we read almost everyday the fact that hedge funds and naked shorters are on the war path of almost every mining stock it makes one wonder if even though the stock price is undervalued, does one buy the stock only to maybe see its value fall even more?
It's all about risk, they say. Whoever they is. Risk verses reward. The question is how much does one want to risk or better yet how much can one even afford to risk. In these time most can afford very little so buying into a lot of mining plays can be a dicey game of chance. One only has to look at the hot prospects of gold finds two years ago to out that they have also turned cool to cold today.
You can buy bullion as a way to invest. After all gold has returned about 15% per year since 2001. That is a whole lot more than any so called secure investments like a government saving bond or any government tresasury bill. The problem with buying bullion in these days is the premium that one must pay and also the availablity of the bullion itself. One does not have to look far to see that there is both a PHYSICAL gold and silver shortage. Wait times can range from a few weeks to months. Investing in precious metals is a great idea and I invest in both gold and silver myself and encourage others to buy as a safe haven or as some call it, insurance.
Mining claims. Our motto for the new year is: "Don't Buy Gold, Buy A Gold Mine". Today we are seeing a lot of investors and people who just want to cover their backsides a bit are looking more and are into researching, exploring for and outright buying of good mining properties. Whether they are staking those claims themselves or just looking at buying claims, we have seen a huge interest and demand for good mineable properties and it only make sense. For the price of three or four ounces of gold you can own an entire claim that has the potential to produce back to you, hundreds if not thousands of ounces of gold.
Although gold mining is a heavily risked game there is still money to be made by optioning the ground, proving the ground and then reselling or optioning the ground, or just mining it your self. A lot of present day successful miners got their start with a pan and a small hand sluice. A lot of them were mining gold this way when the price was a mere $300 or so. It takes a different type of person to take on the challenge of prospecting out a claim. It takes a lot of HARD work also but the rewards are there for those who dare.
I truly believe that we will see $3000 gold in the not too distant future. I have stood by my predictions of $3000 gold for about the last seven years. There are others who are predicting $5000 gold and higher but if you think of the average mans salary today, all you need is an ounce or two each month and you can make a living. No one told you that you would get rich or make a lot of money, just make a living. In todays world with so many people out of work period, making a living and getting by is not all that bad of an idea.
Seasons best and the best to all in 2012.
Gregg Adams
webmaster/editor
Junior Miners Is Four Years Old
May 10.11
Four years ago juniorminers.com was launched online. That may not seem like a long time but in internet years it is a very long time. It is kind of like measuring time in dog years. We have seen a lot of growth with the website over those four years. From one or two visits a day to over 500 and more visitors a day and from about 40 pages to well over 140 pages of information, talk and classified ads, we have seen a lot of growth. Speaking of ads we have we have just listed some real exciting properties in the Yukon again. These are placer claims on the famous Dominion Creek just a short 30 minute drive from Dawson City. Also if you are looking at getting into the placer gold mining game we just listed a real sweet trommel that is for sale. Be sure to check both these listings out.
At this time silver is back up to just under $39.00 and gold is back basing well in the $1500 range. This is all setting up for an exciting summer of mining and exploration.
Thanks to all those who stop around for a visit, those who have joined our newsletter and to all those who have used our advertising service. We plan on being here in another four years.
Don't Sell Your Gold. Mine IT!!
Apr.14.11
With gold and silver now at all time highs, there are a lot of people who are out there selling their gold to the "cash for gold" buyers that are popping up everywhere. That is one side of the story. On the other side we have those who are looking to get into the mining game and right now there is a lot of interest in mining claims. This past month we have seen some quite spectacular sales in the classified ad section here. Two groups of Yukon placer claims selling within weeks of getting listed.
Today we just listed another large block of claims in the Dawson area. This is the highest priced property we have listed here to date. Lots of claims, lots of gold. 4 million dollars. If you are interested in getting into mining in a big way, this could be that right opportunity that you have been waiting for.
Metals Still In An Uptrend
Mar.25.11
Both gold and silver have hit new new highs. Silver is not quite a high but a new 31 year high. Unfortunately though a lot of the junior miners are nowhere near their highs. It seems a lot are sitting on lows or close to it.
News from Japan about reactors brought down uranium stocks quite hard. Some have turned around and for those who climbed on board have made a tidy profit already. Speaking of uranium, we have just listed our first ever uranium property in our classified ads section. In fact we have a lot of listings this month so far. This month has seen a lot of properties listed. Some claims in Mt. Nansen that were listed in early March already have a sold sign on them. What does that tell you about good mining property??
New Highs In Metals
Mar.6.11
Precious metals have been on a real tear lately. We get the odd email asking us which sector we feel will have the highest go or most upside in the junior mining stocks. On a personal level we feel that silver as a metal in physical form and some of the pro silver juniors will do extremely well compared to say some gold or base metal players. A lot of these silver miners are really beat down or just plain undervalued.
We added a few silver miners this week to our list. These miners are listed on the ASX exchange in Australia. You can grab links etc. from this page
Also on the note of silver, we would like to let readers know that Bullion Vault now has live silver trading. We had been trading gold with them since 2008 and just rolled over our gold position into a silver account and (not to boast... but) have done quite well with it so far. For anyone interested in trying their hand at trading silver on the swings this is a great place to go as you can buy silver positions right down to the ounce. Also a great way just to accumulate silver.
We are also subscribed to the Midas Letter and you should to. Not only are they giving you great information on mining stocks but they they are giving you a chance to win $100,000 in gold bullion. Talk about putting your money where your mouth is. Last year they averaged over 200% on their stock picks. That's a whole lot better than the 1 -2 % you get at the bank these days.
News! Hot Off The Press!
Feb.16.11
Our featured junior miner today released news of a new vein from their Ample Gold Max project in BC. This new quartz vein is located in a previously unexplored area, and is located north of the Ample-Goldmax Main zone.
Continue here ....
New Listings In Our Classifieds
Feb.5.11
We have some new listings in our classified section. Properties in Yukon and also in Pearson County North Carolina. If you are thinking about getting into the mining game you couldn't ask for better timing or better properties. Click here to view these ads.
Also we are updating our directory as some of the listings have outdated info so if you are a junior miner, maybe check the directory to see if your listing is up to date. We have had several companies contact us to update their info.
Lastly, if you have not signed up for our news letter, now would be a great time. It's free and we hope to have some good news worthy information to keep everyone up to date with what is happening in the junior mining world.
New Featured Junior Miner
Jan.17.11
We always thought that January / February, March were the months for gold. At least that is what I thought. If that is the case we sure are not seeing that this year. It may be the months for gold etc. but the prices seem to be really lacking direction. Let's hope this changes before months end. I did a short artcile on both the HUI and the GDXJ the other day as they had both fallen below the 100 MA.
We also have a new junior miner that is being featured with us and this company has an exciting play going on right now, right here is B.C. Not many shares OS and a low share price right now make this play well worth the look.
Read more here .....
Back To Work At Tulsequah?
Jan.6.11
Remember Tulsequah? That was the mine site in the north west corner of BC that Redfern Resources wanted to develope over the years. It was the mine that had so much controversy with the enviromentalists, the First Nations etc. The company went under during the 2008 credit crisis and the stock ended up being delisted. Anyhow it looks like the project is
going to get another look. Chieften Metals is the new company that is looking at doing some work there. Their ticker is CFB.
Heavy Metal vs. Precious Metal
Mar.13.11
We read a lot of articles each day from different writers about their views on the mining and metals industry. By watching the metals industry you can sometime sort of predict the way the market for mining stocks will trade. I say "sort of" because it seems I am either ahead of the herd and get impatient and sell out or I am completely out of the loop and the last to hear so it seems.
This weekend I was reading news items from Sprott investing who sees precious metals, most specific being silver, heading to maybe triple digits in the next few years. Here is one of the industies investment gurus talking about silver out shining everything. Of course there are a lot of others out there who will also agree and a lot of other will not agree. But being a silver buff myself I am thinking it best to agree.
So when it come to investing money in silver, which is the best route to go. Does one buy stocks, etf's, physical, certificates or ?? We of course here at junior miners would say that stocks is the best way to go. Find a junior miner that has good silver property in development, some cash, good management and one that trades moderately and purchase some shares. As the junior gains in being noticed by the investing public or drill results etc. hopefully the stock will rise in price over the long term.
Investing in ETF's can be OK as long as there is a certainty that all the shares are backed by silver and stored secure so as the bullion itself can not be loaned out.
Buying physical is a great way to own silver. Whether you buy from the mint or banks or even from some of the miners themselves such as First Majestic physical silver is a great way to own and hold silver.
If you are just inclinded to trade silver on swings by buying low and selling high because silver is quite volitile, you can do that also. We trade silver ourselves here through a company that is based in England. The company, Bullion Vault alows you to own silver and trade the silver in a pool with others. Once you build up your position you can purchase a kilo bar in your name. So in reality you can start out with say just a few ounce ounces of silver and sell the highs and then buy the lows to build up more ounces. We have been trading silver now for the better part of a year. We started out with a position in gold but when the volitility is not there it can be sometime harder to make any profits.
Be sure to head over to our Mining Stock Talk section where we update news a few time each week about the juniors. Also if you are interested in mining yourself or getting involved in mining we have had some very interesting properties getting listed on the site. Be sure to check that out also in our classified section.
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
It's A New Year
Jan.2.11
It's a new year and we at junior miners would like to wish everyone a happy and of course a prosperous new year. That prosperity can come in various shapes and sizes and it is not always related to finacial prosperity. It can also be found in health and contentment.
This year saw a lot of juniors active in their projects all around the world. From BC our home place to Yukon and abroad to Tanzania, junior mining companies were out in full force looking for the next discovery. Canaco in Tanzania was one of the hotter plays this past year and saw it's stock price rise around the 1000% or so. We are following a few other small Tanzanian plays over in our new section of the site at the junior mining stock talk section. After selling our site penny mining stocks .com we decided to evolve a new section to carry news about the trading of these junior plays each week.
Lots of claims were listed here and sold this year. Some of these mining claims were priced well into the upper 100 thousand bracket so that shows that mining claims and the interest in the mining field is climbing. Site vistors reached over 13,000 in December. That is about double from normal traffic. We feel a lot of this is due to the amount of traffic coming to the new junior mining stock talk section that we mentioned in the previous sentence.
We are also subscribed to the Midas Letter and you should to. Not only are they giving you great information on mining stocks but they they are giving you a chance to win $100,000 in gold bullion. Talk about putting your money where your mouth is. Last year they averaged over 200% on their stock picks. That's a whole lot better than the 1 -2 % you get at the bank these days.
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
Juniors Slow To Trade
Nov.20/10
This month we saw gold hit a new all time high and then crash about 6% down. Silver about the same. While all this is happening the juniors seem to just sit on the sidelines going un-noticed. There are a few juniors who are active in trading, a few others merging like Silvermex and Western Coal, but for the most part the juniors are basically flat on the month.
some websites state that some bigger money is heavy on shorts on the junior sector, others say there is just no interest as the mid cap players are gettting the attention from the majors so that it where the money is going. Who really knows.
In other news, due to demand from some readers we have opened a new section that we use to have over on the penny mining site. The new area of the site is called "Junior Miner Stock Talk" and you can get there by this link or you will notice the new menu button at the very top of the menu. In this section we will be doing small write ups a few times a week about some of the smaller players that don't get to much attention otherwise. Good place to read up on brief bit of news that can carry some weight down the road on making decisions about trading.
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
Western Canada Exploration
Nov.5/10
When people think about junior miners and their home turf most will think about British Columbia. After all that is where the VSE better known as the Vancouver Stock Exchange was located years ago and that is where most of these small juniors were listed.
You had to be listed there first and had to get some good finds that let to bigger money before you could get noticed on the big boards of say the Toronto Stock exchange.
So you see BC was the place to start and BC was also the place to look for minerals. For a lot of people BC is and always will be the place to be. We even have mining claims ourselves that we tend to in BC.
So when it comes to finding mines and getting all the drilling and exploration done and the years of work put behind you, it is sort of sad that in BC you could loose the opportunity to mine the mine you found. That is what happened to this week to Taseko. Their Prosperity Mine did not get the go ahead due to federal departments. All that work and then this. Yes it is sad.
So who is going to find the next big mine? Well Terrane Minerals got the go ahead for their Mt. Milligan mine. There will be some jobs created and more money will flow into the area and that alone will keep some small prospectors pinned with hope that they to may one day find the next big find right here in BC
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
Tanzania
Oct.23/10
When someone thinks of gold mining and exploration they tend to think about places like Nevada, California, maybe Chile, Ontario or BC and those sort of places. Few if any think about Africa and Tanzania especially. Most people have never heard of the place. It's one of those "not in the news places".
Tanzania is however one of the larger deposited areas of the planet. Companies like Barick are mining in Tanzania and there is getting to be kind of rush on land there. While it is mostly larger cap companies that explore in Tanzania, there is getting to be a number of smaller cap penny miners that
are starting to explore areas of Tanzania.
While a lot of people who are into junior mining stocks know about Tanzanian Royalty (TSX-TNX) and it's presence in that country few are aware of the smaller ones. Companies like MDN Inc. (TSX-MDN)have also been in the country for some time. Now smaller ones like Currie Rose (TSXV-CUI) and Sidon International (TSXV-SD) are in the news with exploration projects..
These last two plays give the investor a chance at getting involved in a Tanzanian play for under 20 cents a share. Both are active at work in older proven areas and should have news coming out on an on going basis.
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
Buying Gold Online
Feb.6/10
We get emails from time to time asking about the best way to buy gold is. Well aside from buying 1 ounce gold coins which is now getting quite expensive from banks or coin shops we have focused on a way to be able to buy gold buy the gram.
Now Kitco does run a gold pool where one can buy a gram or so and keep adding into the pot but we have for 2 years now been with a company out of the UK called Bullion Vault. Bullion Vault allow you to open an account and start buying gold on different exchanges and in different currencies. You don't have to buy and sell in US dollars. That is the difference and that difference alone can play big in profits if you work both the gold market and the currency markets.
Now if that starts to sound to complex, don't worry. Just be like us. Open and fund an account, get it verified and trade away. It's all quite simple. You get a bank draft from you local bank to fund your account. Once the funds are there they notify you and then you verify who you are and thats it. Start with a little or start with a lot. What you are buying and selling is grams of gold. It's a great way over time to add to your total sum of gold. When you want to sell you just sell and notify them and they transfer the money back to your account.
With gold being active and looking for a base around $1000 an ounce like it is now, this is a good time to get started. And for the fact that you can get a free gram of gold makes it all the better.
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
Buying Silver Eagles & Silver Snowball
Feb.3/10
A lot of people write in asking about what the Silver Snowball program is that they see on this site. To make a long story short I'll write a bit here about it.
The Silver Snowball program was started a bit over 2 years ago by a fellow by the name of Ed Freeman. (He still runs the program himself) He wanted to make a way for the average person to be able to accumulate silver in the physical form. He also wanted to make it affordable and still be profitable. So what he did was set up a program like an MLM where you become a member and buy 1 coin per month. Then you tell others and once they join and buy a coin each month you get rewarded with bonus coins. Basically it is a 2 for 1 system. Each month your members buy you get a bonus. If you have 2 people you sponsor and each person buys 1 coin you get a bonus coin.
I of course have always like to add to my collection of silver so this became a disiplined way to accumulate silver. Each month I would buy my 1 once and after a while others joined and I was rewarded with free bonus silver.
Of course it seems that where you look these days in regards to the internet you see nothing but scams. Pay and get nothing seems to be the theme of the day. I get this all the time even from people wanting to place ads for their claims. Some are scared of paying out even $20 for an ad that they think will not get posted.
The point I wish to make is that as of last month it will have been 2 years and I am still in the program and I am still getting free bonus silver. Yes I have seen a lot of people join and a lot of people leave, but all in all most people do manage to get a few others to join and find out that they too are getting bonus silver each and every month.
So if you are interested in an MLM program or feel that you would would like to get a bit of silver on a monthly basis, then you are most welcome to join up with the rest of us.
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
2010. The Metals Bull Market Continues!
Jan.18/10
This metal bull market we are in has been here since 2001. That is when gold made it's turn around from $260 an ounce and has climbed each year to where it is today. Lots of wealth has been created by some who have bought and sold mining shares over these years. Others are breaking even after the fallout of 2008, but all in all most investors are or at least should be on the plus side by now.
We see a lot of analysts each week or almost every day touting that gold will see $5000 plus an ounce and silver maybe $200 or even more. Well how then does the average investor or say just the average guy on the street get a piece of the pie. On way is by doing due diligence on mining companies and buying stocks. The other way of course is by just buying physical gold and silver bullion from coins shops or online. You may mot see the same explosive price gain with bullion as you will with some stock, but you will have the physical stuff in the palm of you hand. And as the old saying goes,"One in the hand is better than 2 in the bush."
The third way is by being really pro-active and ambitious and by that we mean going out and staking a claim or you own. Whether you stake your own or buy one you have the same chance as making it big like any other person out there. If the gold is there, the gold is ther. It's just up to you to go out and get it.
Gold mining or placer mining was a way of life for many families during the 1930's depression. With no jobs to be had many families headed out to sluice and pan the creeks to get their button a day. It doesn't take a lot of gold to make a days wages even mining buy hand. With prices of $1100 per ounce today that works out to about $40 a gram and a gram is pretty itty bitty. Besides, there is nothing like being outside in the fresh air with nature, panning, sluicing and camping.
For those who wish to mine bigger you can always stake or buy claims that are deeper ground. Either way we have claims from all over the North America listed for sale here. Why not check them out today and see if there is a claim in your future.
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
Dec.5/09
Black Sand Concentrates
For placer miners the world over, "black sands" are a fact of life. Every miner has to deal with "black sand". After sluicing and cleaning up concentrates and getting all the gold out there is always that "fine and super fine gold" that just won't come out. Many methods have been tried over the years from vibrating tables, gold wheels, spirals, jigs and the list goes on and on. Also in a lot of cases most miners just get what they can and then just leave the rest.
This summer we were on a mining project testing ground for grades. After each cleanup we would weigh out the gold and calculate the weight verses the yardage and come up with a ground value. In each case there was this annoying black sand to deal with and in each case we just dumped it out. When the season had ended and we returned back home we had these sample of gold and we also had plastic tub with a 12 pound sample of this "black sand".
My uncle who is a prospector stopped in and we were showing him our gold finds. We also showed him the "black sand" we had got. He told us that there could very easily be a few ounces of gold in there. After giving us the name of an assayer friend of his we contacted this assayer and true enough there was gold in. Even though there was NO VISIBLE gold there was gold in what they call "matrix" gold. Gold that is encased in heavy metals. And when it was all over we found out that we had just shy of a 1/2 ounce of gold for a 12 pound sample. Put that into perspective and you have 80 ounces per ton. Depending on the gold price I'll let you do the math on that.
So Mr. Miner your lesson here is get your "black sands" assayed. You may be really surprised or even shocked as we were. While I am on this speel I would like to tell you we also sell a small ebook about making money from you "black sands".
What else is new here? We installed links to map viewers on our classified ads page. They are located on the left hand column marked in blue lettering. We felt this would be a handy feature to have as some sellers are now listing there claims with the tenure numbers. This way if you see an ad that has claims that interest you, just open the map viewer and input the tenure or claim numbers into it an the map will open to where the claims are located.
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
Dec.3/09
Yukon Calling
This month we have seen a lot of interest along with quite a few new listings of placer ground in the Yukon Territory Of Canada. The Yukon is probably still the best spot in the world for placer mining. Areas around Dawson have been mined for years. There was also a gold discovery north of Watson Lake about a month back. Things are really looking up for the part of the world and higher gold prices are making it happen. If you are at all interested in placer mining, be sure to check out the new listings in our classified section.
Also INO started to select one winner every Monday, Wednesday, and Friday starting on November 30th through December 25th. The winner will select their choice of prize and the remainder of the prizes will be available for the next winner picked.
You can read about the prizes up for grabs here. Some of these are really good if you are into stocks and trading.
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
What do super-traders have in common?
How much do you think you could learn if you had a chance to sit down with over 15 of the most successful day, value, and long term investors of all time? Do you think you’d finally get that one piece of advice that takes your trading from OK to extraordinary? Today you have the chance to pick the brain of one man who has sat down with experts and got your top questions answered.
The key ingredient with ‘super-traders’ isn’t as complicated as you think, as most of them share the same traits and behavioral patterns, but it’s how they put them to work in the markets that sets them apart.
Visit the link to watch the seminar that brings the experts to you.
Don’t delay and once you visit the seminar you’ll notice 3 other seminars… that’s a special bonus just for you, from us at junior miners .com!
Until next time.
Bring home some nuggets and get some hot tips of the next big play right here
GAdams
webmaster
Our DISCLAIMER
Nov. 4 2009
Gold is hitting an new high each day it seems which of course is good for all us gold buffs out there. Some of the plays we are watching close is Terrane Metals TRX and their project in BC here. The stock today was over the $1.00 mark and trading volumes have been heavy.
Silver sure has lagged a lot and there is getting to be quite a number of articles talking about the gold/silver ratio. We love silver bother metal and the plays. Silver Quest SQI is a small player we are watching also.
Big News For Juniors Miners And Investors
We were reading this week that there is going to be a new Exchange Traded Fund (ETF) specifically for junior miners. It's called the junior gold miners etf and is marketed by Market Vector. The Van Eck gold miners ETF GDXJ. It will be comprise of a group of junior gold miners and other junior gold mining companies and explorers. So that is very good news for an over looked sector.
Until next time.
Bring home some nuggets.
GAdams
webmaster
Our DISCLAIMER
We At Junior Miners Are Back On The Net
We were away this summer on an exploration trenching program in North West BC. We of course were on the hunt for gold. Placer gold to be exact. Mining and testing for placer gold is sort of the easy mans way to a "maybe" riches. I say easy because of the methods used. Easy work? No way. Tromping thru buck brush butt high with gum boots packing pumps and hoses, swatting blood sucking insects is far from easy. It is however an easy way to loose weight and stay in shape. If you don't mind total isolation, it could be a very good life though.
Lots happened this summer also. Gold rallied toward the end into the $1000 range and seems to hold. Silver also rallied well and copper as we had kind of thought all along came up in price also. If these prices hold throughout the year and over the winter maybe all of our summer work will pay off.
Be sure to check out our Adpost as there is new ads posted now of claims for sale. We also have some mining equipment listed and more should be on the way. Good to start shopping for equipment now than wait till the last minute. There is not much for placer equipment available right now at reasonable prices.
Also claims are selling for a pretty penny. I heard through the grapevine that 5 placer cells on a creek next to where we were testing sold for $78,000. No questions asked.
Small Scale Mining = Profitability
The following is written by David Duval. You can read more of his writings at JSMineset.com
With Commodity Prices Trending Upward, Near-Surface Mine Development and Royalty Model Become Options for Junior Explorers
By David Duval
The contemporary wisdom that "bigger is better" has taken a well-deserved beating since the credit crisis unfolded and destroyed some of the world's largest financial institutions in its wake.
With large-scale project financing options limited or non-existent because of the credit crisis, many of the smaller players in the global mining industry have been forced to review their growth strategies, a trend that could see historic mine development practices making a comeback and less mainstream business models adopted.
Perhaps not since the turn of the 19th century has the appeal of "small" become so attractive. Indeed, today's examples encompass a broad range of industries including power generation (wind turbines, small hydro, solar etc.) and small mining operations that provide feedstock to portable or centrally located process plants and refineries, a practice that is relatively common in Asia and Africa.
Not being major enterprises with large industrial footprints, long permitting periods, and high capital costs, these businesses can be developed incrementally from ongoing cash flows, substantially reducing the risk to investors. In the "good old days" this scale of development was the rule rather than the exception and most of the world's major gold camps were discovered and developed on this basis over a century ago.
In his book titled, History of Dakota Territory by George W. Kingsbury describes the development of the Homestake Mine in these words:
When the claim was purchased by the Homestake Mining Company the exploration consisted of small surface pits only and some mining men considered its value as doubtful although there were a number of favorable surface indications. The company immediately began the further exploitation of the property and two shafts equipped with hoisting engines were sunk and various drifts were soon under way.
By July, 1878, or the year after the purchase of the claim, the first mill of eighty stamps was constructed and in commission. With the first dropping of stamps it was proved that the mine was a producer and from that small beginning the mine has steadily expanded, breaking all records and setting a new pace in the world of gold mining. Although it is a very low ore, illimitable tonnage is at the disposal of the company and large mills, the most improved mining machinery and great mechanical power enable the mine to pay large dividends.
It's worth noting that Homestake was listed on the New York Stock Exchange in 1876 and its now dormant South Dakota mine produced approximately 40 million ounces of gold over a 120 year period before the mine's economic reserves were exhausted in late 2001.
Mimicking the discovery of other major gold finds at the time, Homestake began as a surface showing with gold values occurring in vein material that was easily distinguishable from adjoining wall rock. Pick and shovel mining provided a bulk sample for metallurgical test work and grade estimation.
First off, however, the miners recovered gold from alluvial gravels that were eroded from the hard rock vein material. Exploration shafts were then sunk to evaluate the vein material at depth, producing gold in the process to offset exploration costs.
In many parts of the world (including Africa and Latin America) artisanal miners have already gained access to sub-surface vein material by hand sinking small shafts and mining along the vein structures. In fact, you would be hard pressed to find a major mine in Africa that didn't have such workings within its property boundaries. These old workings facilitate target selection and the development of a resource base for production purposes.
Because of its high specific gravity (gold's relative weight to that of water) gold concentrates in stream beds within alluvial gravels and it can be extracted by mechanical methods that take advantage of the fact it is 19.3 times as heavy as water.
Gold occurs in many different geologic settings but two basic types of occurrences or deposits are recognized: primary and secondary. Both rely on similar chemical and physical processes to produce economic concentrations of gold ore.
The Homestake discovery didn't have the advantage of present day drilling technology to confirm the existence of an orebody whose life would extend for more than 100 years. Instead, the economic viability of the mine was established by mining and processing the easily extractable surface material with equipment that used gold's specific gravity to produce a saleable concentrate. In the late 1890s, cyanide was employed to recover fine gold from rocks and is still used under carefully controlled conditions.
Even today, gravity separation is the best proven and accepted technique of concentrating minerals due to its high efficiency and low cost. In addition to gold, gravity separation remains a primary means of concentrating iron, tungsten, tin and coal ores.
Process plants (mills) for gold need not be large and in fact they are often manufactured and assembled in large industrial centers where skilled trades people are readily available. By employing modular construction techniques, equipment can be brought into a mine site by truck, air transport and in the case of tidewater locations, by sea barge. The various modular sections are simply joined together like a kid's Lego set on the mine site. As the operation expands, new modules can be shipped to the site and added to the existing plant facility.
In order to reduce capital requirements, companies often employ contractors to mine their mineral deposits at a fixed price, locking in costs for the term of the contract. With contract mining, a company need not acquire in-house mining expertise or equipment that would only be utilized on a seasonal basis in any event. For smaller operations, contractors can provide services for a sufficient length of time to develop a stockpile for year round milling operations.
What's surprising about today is the reluctance of many companies to consider the small scale, staged development of mineral deposits which is much less risky from both a financial and technical standpoint. In gold's case, some of that reluctance no doubt relates to the belief by analysts that any company producing less than 100,000 ounces won't get adequate market recognition. But as we've seen during the global financial crisis, analysts sometimes make a habit of being just plain wrong.
Nonetheless, in an escalating commodity price environment, the appeal of these modest-sized operations is certain to increase, especially where possibilities exist for multi-sourced production that will boost consolidated output to even more attractive levels. This has been a feature of China's mining industry for generations and is certain to catch on in the West before too long.
Physical gold output even on a small scale basis provides price leverage to companies in the marketplace, especially for situations where the exploration potential leaves room for future production growth.
The Royalty Model
Less mainstream perhaps but even more attractive to the market are royalty companies who either purchase royalty interests (and gold production) in producing mines or seek to acquire royalty production through exploration successes.
Companies bringing new mines into production are sometimes willing to sell Net Smelter Royalty (NSR) interests in their operations to offset some of the capital costs. But these royalties are prohibitively expensive for junior companies with limited access to such capital.
This is not an issue for royalty companies that employ an exploration model, however. In these situations, companies with strategic land positions in established gold belts deal off their holdings to third parties in exchange for a royalty interest should the property achieve commercial production. In the interim period, the royalty partner agrees to make staged exploration expenditures and property rental payments (usually escalating) until commercial production is achieved.
The premise behind this royalty strategy is that companies can discover gold at a much lower cost by utilizing their exploration expertise and core assets as opposed to purchasing production on the open market. Clearly, it's a strategy whose time has come!
Until next time.
Bring home some nuggets.
GAdams
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Analogy Of A Good Junior Miner
May 6/09
The following is written by Dan Duval and reprinted with permission.
Evaluating the merits and future prospects for a junior exploration company is a highly subjective process. Intangibles such as political risk, financial risk, market risk, commodity risk, technical risk and a host of other variables confront companies across the entire minerals industry spectrum. Nonetheless, no matter what the relative size of the company or the commodities segment it’s actively involved in, the best place to start your evaluation is with management.
This is especially true for junior gold explorers, the segment of the minerals industry that accounts for the largest proportion of global exploration expenditures and, predictably, the vast majority of new gold discoveries.
In reality, these are the “feeder companies” for the major gold producers whose primary focus is usually weighted to production (i.e. bread and butter issues) rather than exploration. In order to maintain the annual production rates that underpin their share price valuations, these majors need new sources of gold production and junior explorers are usually the ones that feed their insatiable appetites. Not surprisingly, when push comes to shove they are generally willing to pay a king’s ransom for undeveloped, economically viable gold resources in the ground.
Let’s have a broad look at several important criteria one should examine before determining a suitable investment in this often complex but infinitely exciting investment sector.
Management: Do the Litmus Test
It shouldn’t come as any surprise that good management can spell the difference between success and failure. So how does one determine if management is good or bad?
First and foremost past success is arguably among the best litmus tests for gauging management, although it’s certainly no guarantee. In this Internet age, regulatory filings and Google searches can often reveal a library of information on specific individuals and corporate entities.
A good CEO with a track record that includes at least one notable success generally has the ability to attract risk capital because people like to bet on a jockey that’s won a race already. In addition to having market recognition from past successes, they often tend to be magnets for high quality exploration projects.
Most investors in this market sector have observed seemingly well qualified management ruin good exploration companies because of bad technical judgements and even poorer market decisions. In the latter case, non-market oriented executives often forget that markets and exploration-related activities are closely aligned - if not joined at the hip. Those who manage one without paying attention to the other do so at their peril.
These days it’s quite uncommon for industry executives to have a personal investment in the companies whose future they control. Instead, they elect to take large salaries and award themselves cheap stock options which are typically re-priced lower when the company’s stock price reflects their lack of success.
Executives who are willing to risk their own money with ordinary shareholders have an added incentive to be successful. In old fashioned terms, it’s called “putting your money where your mouth is” - a lesson that unfortunately is largely ignored by most contemporary mining executives. Their shareholding need not necessarily be large but it should at least be meaningful.
It’s also wise to look for management with a broad knowledge of the minerals industry and capital markets, both of which are integral to running a successful company. These attributes need not be exclusive to the CEO but they should feature prominently within the corporate management team including the board of directors.
Senior executives don’t necessarily have to be geologists or engineers but they should at least have the ability to attract, manage and motivate a multi-disciplined group of industry professionals who share the corporation’s philosophy and objectives. Who can forget Paul Penna who brokered penny stocks in Toronto before he became the guiding force and chief executive behind one of the most successful mining companies in the world, Agnico-Eagle?
Personal integrity and the ability to communicate the company’s message to shareholders and the marketplace round out the critical attributes that one should look for in public company management.
Summary:
In the minerals business, past performance is often a good indicator but not a guarantee of future success. Pick management with strong track records and preferably at least one notable success (i.e. mineral discovery). The ability of management to raise capital to fund the company’s activities on an ongoing basis is also critical as the price of any exploration company’s stock is results driven - and getting those results costs money.
Management integrity can be determined by examining the way a company conducts its business, especially in foreign jurisdictions. In the case of developing economies, this would include a strong commitment to the principles of sustainable development.
Also, one should keep in mind that a company can be a success in the marketplace without taking a project to commercial production. In fact, the majority of mineral explorers never achieve such a distinction, selling out instead to an operating company with production expertise, perhaps retaining a royalty in future production.
Project Selection: The Best Place to Find a Mine is Where There is One
There are many aspects to selecting a good minerals project. But smart companies attempt to reduce some of the geological risk by exploring areas with known mineral potential as well as active mining operations.
Most of the world’s gold production comes from greenstone belts, ancient volcanic and sedimentary rocks that feature prominently in the mining industries of Canada, Australia and South Africa. These belts typically host a broad range of metals including gold, silver, platinum, nickel, copper, lead, zinc and even diamonds.
When you examine the evolution of these belts from a precious metals standpoint, new discoveries are being made well over one hundred years after the initial discoveries. Emerging greenstone belts, including the Lake Victoria Greenstone Belt in Tanzania, are relatively early in their development and will likely account for increasing amounts of gold and base metals production in the years ahead. In these regions, the larger the land position you have the better!
Companies exploring such areas are generally good exploration bets because the infrastructure in these regions tends to be better and the local population generally has a cultural affinity towards mining.
Summary:
Pick companies with large strategic landholdings and exploration projects in areas with proven geological potential, active mining operations (= good infrastructure), and a recent history of discovery and new mine development.
Project Development: Establishing the Big Picture
Exploration methodology has changed little in decades with the exception of data processing which today is understandably highly computerized. “Boots on the ground” remains the most effective method of discovering mineral deposits and that’s not likely to change any time soon - if ever.
Evaluating an exploration project is most meaningful at the drilling stage and this is when investors usually step into the marketplace. Market activity during this period is generally based on the timely release of exploration results. Understandably, diamond drilling or rotary drilling results are considered the “Gold Standard” during this phase of exploration because these results comprise most of the input data for resource calculations.
In Canada, geologists must adhere to the 43-101 standard when reporting resources for any commodity. This standard is a codified set of rules and guidelines for reporting and displaying information related to mineral properties; and it applies to any company listed on a Canadian exchange which is where the majority of the world’s junior explorers are trading.
Resource estimates are by far the most misunderstood feature of the 43-101 reporting standard. Investors like to apply values to resources that have not been proven economically viable which is a long, costly process. This is particularly true for “Inferred Resources” which have a great amount of uncertainty as to their existence, along with their economic viability. It cannot be assumed that all or any part of any Inferred Mineral Resource will ever be upgraded to a higher category.
For large exploration projects, most companies focus on developing the property-wide potential with widely-spaced drill holes. The reason for this is actually quite simple and practical. Drilling is expensive so rather than expend money tightening up drill hole spacing to produce a resource with no economic legitimacy, companies prefer to assess the global potential to ensure they end up testing the most attractive targets.
Summary
When assessing the potential of a mineral property, make sure your analysis falls within a big picture context. One thing to look for is a broad distribution of gold values on the property. You can find comprehensive information on exploration companies from publicly disseminated news releases and regulatory filings. The technical information in these filings has to be 43-101 compliant, providing a high measure of security to investors. Be careful not to apply economic viability to any resource category, especially inferred resources. Even resources that are included in a full fledged feasibility study are subject to various assumptions including future commodity prices.
Exploration Agreements: The Devil is in the Details
Minerals exploration is often conducted under joint venture agreements. In these situations a corporate entity has the right to earn a specific interest in an exploration project for a set expenditure over a specific period of time. In most cases, the expenditure commitment would include money for exploration and staged option payments to the property owner. Look closely at the JV agreement to determine what interest the optionee can earn (the larger the better) and the cost associated with earning that interest.
Junior partners involved in exploration joint ventures with major companies are at a distinct disadvantage. Make sure they have the internal ability or have sought professional help to ensure their joint venture agreements do not subject them to any derivative-related exposure or accounting related issues at production that will prevent them from achieving a timely return on their investment.
Summary
Exploration agreements are important and can make or break a company. Make sure you know exactly what interest the company will end up with after the earn-in period. Also, beware of excessive financial commitments (including non-exploration related option payments) that can put the company at risk during periods of market weakness. In the event commercial viability is established, ensure the production agreement with the major allows for a timely return on the junior partner’s investment.
Royalty Agreements: Low Risk, Premium Market Valuation
Some companies opt for Net Smelter Royalty agreements (NSR) which limits the financial risk associated with funding exploration work themselves. The royalty model allows for industry partners to earn up to a 100% working interest in an exploration project for a firm exploration commitment and rental (option) payments over a specific time period. In this particular case the property vendor would receive a sliding scale royalty (based on the gold price) should the property achieve commercial production. Because achieving commercial production is the responsibility of the project operator, the royalty partner does not suffer any dilution of shareholder’s equity or development capital risk.
A net smelter royalty (NSR) is the amount actually paid to the mine or mill owner from the sale of ore, minerals and other materials or concentrates mined and removed from mineral properties. This type of royalty provides cash flow that is free of any operating or capital costs and environmental liabilities. A percentage of an NSR royalty on an ore body can effectively equate to a larger percentage of the economic value of the ore body.
Royalty companies have low overhead, are relatively easy to evaluate, and generally command a premium in the marketplace.
Summary
The royalty model is virtually risk free but realizing royalty income from an exploration property is dependent upon the project operator achieving commercial production. For exploration companies, holding a strategic land position in a developing gold camp is an essential requirement to attract royalty partners. Royalty exploration companies operate under the principle that you can find gold cheaper through exploration than you could by purchasing production through royalty agreements on the open market. Royalty companies are attractive because they typically command a premium in the marketplace.
Until next time.
Bring home some nuggets.
GAdams
webmaster
Our DISCLAIMER
Precious Metals Up!!
Feb.10/09
Both gold and silver have gained quite nice so far this year. Silver is up 50% from it's rolling 52 week low and gold is up a tidy 10% in the last 30 days alone. With oil prices down, fuel costs may ease a bit and make it more bearable for some juniors to continue with their exploration programs this year.
Stocks that have done well since the start of the year. Nova Gold NG-T up almost 200%, Silvercorp SVM-T up around 100% and Silver Wheaton SLW-T also about 100%. Tanzanian Royalty TNX-T has climbed about 30% and Eldorado Gold ELD-T has climbed about 30% also. Most small base metal players along with precious metal plays have not really performed much at all although it seems that most have found their bottom so for those looking to maybe starting to look for bargains, the bargains are their. Biggest issues for most juniors now will be access to capital.
You may have noticed that we have put up some small links on the site that state we are looking at selling this website. Because we have mineral properties of our own we are finding that trying to keep this website updated on a regular bases and being in the field, some things get left undone. So for those who maybe interested in owning a mining related website, we have extra information right here. Good domain names with well positioned digital realestate is inself an investment for the future.
Until next time.
Bring home some nuggets.
GAdams
webmaster
Our DISCLAIMER
